Which of the following statements is correct regarding the direct method of accounting for any write down of inventories to its net realizable value (NRV)? a. An Allowance to Reduce Inventory to Net Realizable Value account is used to record inventory at the lower of cost and NRV. b. The beginning and ending inventories are measured at the lower of cost and NRV when determining the cost of goods sold for the period. c. The beginning and ending inventories are measured at cost when determining the cost of goods sold for the period. d. The decline in NRV of inventory is reported as an other expense while recovery in NRV of inventory is reported as an other income.

Q: 1.  The lower-of-cost-or-market method can be applied to each item of inventory. each major class…

A: In case of multiple questions, we are allowed to solve only the first question. In case if you want…

Q: 3.Which of the following pairs of inventory terms would NOT usually go together?   a. Periodic…

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Q: Prepare a memorandum containing responses to the following items. a.    Describe the cost flow…

A: a.

Q: Which inventory cost flow assumption generally results in the lowest reported amount for cost of…

A: The answer will be FIFO, First-in, first-out i.e. option B.

Q: Identify the inventory costing method (SI, FIFO, LIFO, or WA) best described by each of the…

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Q: What is meant by the term gross margin? Describe costing inventory using first-in, first-out.…

A: What is meant by the term gross margin?

Q: The cost of purchase of inventory does not include: A. Freight handling and other cost directly…

A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…

Q: The inventory costing method that matches each unit of inventory with its actual cost is referred to…

A: There are many methods to calculate the inventory like FIFO and LIFO method, average cost method,…

Q: An overstatement of ending merchandise inventory in the current period results in an understatement…

A: COST OF GOODS SOLDCost of Goods Sold States that the Amount of Cost Included in the Number of Units…

Q: Regardless of the inventory costing system used, cost of goods available for sale must be allocated…

A: Cost of good available comprises of beginning inventory and purchases during the period and are…

Q: Required information [The following information applies to the questions displayed below.] A company…

A: Evaluating Net Realizable Value is essential for proper financial reporting because it prevents…

Q: When a periodic inventory system is used, a.only revenue is recorded each time a sale is made.…

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Q: 11. What is the effect on cost of goods sold, gross profit, and net income if ending mer- chandise…

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A: The practice of physically counting and confirming the precise amount of items or materials on hand…

Q: The process of recording inventory that gives a lower cost of a commodity sold in an income…

A: The inventory can be valued using various methods as LIFO, FIFO and average method.

Q: Weighted Average Cost (Periodic) Units Cost Goods Available for Sale Cost of Goods Sold Ending…

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Q: Northgate Products Corp. sells gadgets and uses the perpetual inventory system. During the month of…

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Q: To determine the cost of ending inventory using the LIFO​ method:       A. the average cost of the…

A: INVENTORY VALUATION Inventory Valuation is a Method of Calculation of Value of Inventory at the End…

Q: following is accounted for prospectively? Change in reporting entity. Change in…

A: A change in an estimate is accounted for prospectively.

Q: 1a The inventory cost flow method that reports the earliest costs in ending inventory is a. LIFO b.…

A: When the earliest costs are represented in the ending inventory it means that the inventory with the…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.